Reserve Bank of India Liberalizes Commercial Borrowings Policy

Posted by Reading Time: < 1 minute

Feb. 16 – The Reserve Bank of India has liberalized the policy concerning commercial borrowings from overseas sources.

The new policy makes the obtaining and changes in loans approvals process simpler and effectively decentralizes the process. Previously, applicants had to apply for approval from the RBI, and also complete documentation with the Department of Statistics and Information Management, apply for a loan registration number and obtain RBI approval.

Restrictions on any changes to the loan were also in place and similarly bureaucratic. The new policy provides that the decision making process over loans is now divested to Indian AD (state authorized dealer) category banks, essentially the major lenders. AD category banks may now determine most of the loan approval processes, including currency (as long as it is freely convertible), changes of lender (as long as a certificate of no objection is obtained from the prior lender) and changes in debtor status (as long as a certificate is obtained from the Registrar of Companies).

The new policy is expected to enhance and make easier the ability for India based companies to obtain loan financing.

Further information on the policy may be obtained from Vikas Srivastava of the Mumbai office of Dezan Shira & Associates at mumbai@dezshira.com.